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Compound Interest PS

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Intern
Joined: 12 Apr 2009
Posts: 24

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12 May 2009, 17:39
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Question Stats:

100% (00:28) correct 0% (00:00) wrong based on 8 sessions

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Tim invested \$1000 at 10% annual interest, compounded annually, and Laura invested \$2000 at 5% annual interest, compounded annually. The total amount of interest earned on Tim's investment in the first 2 years is how much greater than the interested earned by Laura's investment in the first 2 years?

a. 5
b. 15
c. 50
d. 100
e. 105

from gmat free prep software on mba.com - practice test 1

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Senior Manager
Joined: 08 Jan 2009
Posts: 310

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12 May 2009, 19:56
Tim - 1000 R = 10%
Interest
Ist yr = 100
2nd yr = 110

Laura - 2000 R = 5%

Interest :
Ist yr = 100
2nd yr = 100 + 5 = 105

110 - 105 = 5
Manager
Joined: 27 Jun 2008
Posts: 140

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22 Jul 2009, 01:20
Pretty straight forward calculations here, I read somewhere that GMAT doesnt test the advanced topic in compound interest. ( Probably it was Princeton review, Crack the GMAT).
Manager
Joined: 14 Nov 2008
Posts: 182
Schools: Stanford...Wait, I will come!!!

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23 Jul 2009, 05:14
meesawoosa wrote:
Tim invested \$1000 at 10% annual interest, compounded annually, and Laura invested \$2000 at 5% annual interest, compounded annually. The total amount of interest earned on Tim's investment in the first 2 years is how much greater than the interested earned by Laura's investment in the first 2 years?

a. 5
b. 15
c. 50
d. 100
e. 105

from gmat free prep software on mba.com - practice test 1

Tim earning.
1st Year 100+110=210
Laura
1st Year 100+105=205
So, the difference is 5, A

--== Message from GMAT Club Team ==--

This is not a quality discussion. It has been retired.

If you would like to discuss this question please re-post it in the respective forum. Thank you!

To review the GMAT Club's Forums Posting Guidelines, please follow these links: Quantitative | Verbal Please note - we may remove posts that do not follow our posting guidelines. Thank you.
Re: Compound Interest PS &nbs [#permalink] 23 Jul 2009, 05:14
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